CMS publishes updated Guide on Duties and Responsibilities of Directors

Martin Mendelssohn, CMS Partner based in London comments, "Executives, especially in multinational groups, are frequently expected to become directors of companies in a variety of jurisdictions, often at short notice. Although most European countries have broadly similar rules, there are many differences of detail. Our objective is to clarify the rules for each country and answer those questions most frequently asked by directors – and those advising them – in these jurisdictions."

For example:

• Ability of corporate entities to act as directors in European countries  - this is prohibited in Poland, Switzerland and Hungary, for example, but permitted in certain circumstances in the UK and in Italy.
• Many states restrict the extent to which companies can relieve their directors from unspecified or future liabilities. Directors of a Swiss company can be released from liability with respect to matters which occurred during a given business year by means of a resolution passed at a shareholder meeting, provided that all material facts are disclosed.  However, any shareholder who does not approve the release can bring a claim within six months after the corresponding shareholders' resolution. In Poland, the courts have powers to ignore arrangements that are designed to release management board members from liability.
• Under Czech law, if a company enters insolvency proceedings and is found bankrupt, all directors who served during the previous year are automatically disqualified for three years unless they can prove that they acted as a diligent business person would have done.
• Some states, particularly the UK, favor a one-tier board, while others require companies of a certain size to have a supervisory board. In Germany, for example, a company with more than 500 employees must have a supervisory board, some of whose members are elected by the employees; while in Poland a supervisory board is mandatory only if the company's share capital exceeds around EUR 115,000 or the company has more than 25 shareholders.

NOTES TO EDITORS

CMS lawyers immerse themselves in their clients' business. This enables them to deliver the most effective legal and tax solutions. Both leading domestic and major global corporations work with CMS' 2,800 lawyers across 52 offices in Europe, Russia, China, North Africa and South America.  Clients select CMS because it has the most extensive footprint in Europe of any firm. CMS provides local and industry sector insight, global project management and its specialist teams work hard to add value to their projects, wherever they are taking place. Established in 1999, CMS today comprises ten member firms, all experienced in their local jurisdictions.  This expertise means that clients receive high-quality advice in the local context.  CMS firms posted a combined turnover of EUR 808m in 2011.  For more information, please visit www.cmslegal.com.

SOURCE CMS Legal Services